Funding, legal framework revival highlights Gold sector Value chain workshop

Gold project funding and the creation of a reliable policy framework were key takeaways at Today’s All Stakeholders Workshop on the Gold sector Value chain.

 The Parliamentary Portfolio Committee on Mines and Mining Development is currently in the process of conducting an inquiry into the gold sector in order to understand the sector’s operations, the producers, buyers, communities’ issues, as well as the challenges and opportunities facing the gold sector.

The Minister of Mines and Mining Development Hon Winston Chitando through the National Development Strategy_1 (NDS_1) has set a target for the mining sector to contribute an annual revenue of US$12 billion with the gold sector expected to fetch US$4 billion revenue.

According to the Mines Portfolio Committee chairperson Hon Edmond Mkaratigwa said the failure to amend the Mines and Minerals Act on time has presented a lot of challenges to the mining sector.

“The country has been waiting for 20 years to reform the Mines and Mineral Act. In the same vein, the portfolio committee on Mines was told by the Minister of Mines, that we cannon reform the Gold Trade Act which regulates the gold sector without first amending the Mines act.

“This is nevertheless posing a lot of challenges in the mining sector. For example, section 3 of the Gold Trade Act clearly states that it is illegal for one to be found in possession of gold, but a few years ago Government liberalized the trading of gold through the ‘no questions asked’ policy

“This policy is not supported by any law although it is a noble policy in that it is trying to harness all the gold mined in the country. The legal gaps have created so many challenges as well,” Mkaratigwa said.

He said the failure to address policy frameworks has been creating illegal mining which in term is causing land degradation and smuggling of the yellow metal.

“There has been a proliferation of illegal mining sites, the setting up of unregistered hammer mills, unregistered gold buyers and many mining disputes. There seems to be no solution in sight towards addressing all these challenges and without sounding like an environmentalist, it has to be said that there has been extensive damage to the environment, due to these illegal mining operations.

“What kind of legacy and a future, are we leaving for our future generations? Section 73 (1) (b) of the constitution says, Every person has the right to have the environment protected for the benefit of present and future generations, through reasonable legislative and the measures that prevent pollution and ecological degradation.

“I am sure most of the legislators in this Committee, represent constituencies where gold mining is taking place and you have witnessed how rivers have been diverted or polluted, as well as how fertile land is being damaged, trees uprooted and so on. In some cases, public infrastructure such as roads, dip tanks and schools have been destroyed. Further, we have heard harrowing stories from areas where gold mining is taking place even at grave sites.

This goes against our values and culture as the African people. Where are the dead expected to find peace? In some areas, there are conflicts between miners and farmers and between miners and wildlife conservancies. The perception out there is that once a miner gets a licence from the Ministry of Mines, he or she can do whatever he or she wants with that license. In that respect, early this year, the Portfolio committee visited Maramba-Pfungwe. There it met the Provincial Mining Director for Mashonaland East, and heard of incidents where mining operations are threatening livelihoods of people living in these communal areas,” Mkaratigwa said.

Hon Mkaratigwa said it was of importance for legislators to create laws that protect all land users so others will not be bullied into submission.

He said the legislative framework should be strong to curb the illicit financial flow.

“As policymakers, we need to make sure we have a law that balances the interests of all land users. The current law as it exists bullies other land users into submission. These vulnerable economic players include farmers, environmentalists, wildlife management, traditional leaders and people living in communal areas. With that piece of paper, some miners can threaten other players and at times name-dropping political leaders so that no one goes against the wishes of the miner.

“We are just coming from the Heroes holiday, and each year we are reminded why the liberation war was fought for this country.  In fact, Section 3(1)(i) of the Constitution touches on the founding values and principles of Zimbabwe and calls on all of us to recognize and respect the liberation struggle.

“In the same context under section 13(4) of the Constitution, it is mentioned that, ‘the State must ensure that local communities benefit from the resources mined in their communities.

“This brings me to the issue of what our law enforcement agencies such as the Zimbabwe Republic Police (ZRP), the Zimbabwe Anti-Corruption Commission, and the Environmental Management Agency are doing to curb illicit financial flows from the gold sector.

“ZACC in its Annual Report of 2021 highlighted that in 2019, Zimbabwe lost USD684 million through illicit financial flows (IFFs) and I would not be surprised if most of these losses were from the mining sector.

“This is a lot of money that could have been used to transform our economy.  We have a session on the program where we shall have discussions on gold leakages.  I hope we would get practical solutions on how to curb this challenge from the different presenters. As a country we cannot continue to lose large amounts of revenue through illicit financial flows,” Hon Mkaratigwa said.

Chamber of Mines Zimbabwe Chief Executive Officer Isaac Kwesu said there was a need for a supportive legislative framework for the gold mining industry to grow and develop.

“Other critical success factors include supportive Gold Development Strategy. A supportive legislative and regulatory framework. A stable, predictable and competitive fiscal regime characterized by low royalty which is deductible for taxation as well as streamlined and low fiscal charges,” Kwesu said.

According to Kwesu the gold industry requires an excess of US$1 billion in the next five years to sustain growth and development.

“The gold industry requires in excess of US$1 billion in the next five years to sustain growth and development of the sector and achieve output targets. The local financial market has limited capacity to finance such huge capital requirements on the back of liquidity challenges. Where they are available, they are expensive, foreign investors are demanding gold producers use their gold as security to secure funding. There is need for Government to relax the marketing arrangement and allow gold producers to export their gold and use it for capital raising,” Kwesu said.

According to Mkaratigwa speaking on funding of gold projects, it was of importance for the government and other stakeholders to fund gold mining projects.

“It would be amiss for me not to say something about women in mining. I am sure you will agree with me that there are very few brave women who are involved in mining and this is largely because, by nature, the mining industry is a very tough terrain.

“As a Committee, we had an opportunity to visit Mthandazo Women Miners in Gwanda, and we all got to understand the challenges that women miners are facing.

“It would be prudent for either the Reserve Bank or Fidelity Printers to set aside a specific fund earmarked for women miners only. If we allow women to compete for loans alongside their male counterparts, they will not be able to benefit equally,” Mkaratigwa concluded.